Thursday 20 September 2007 10.00 EDT
First published on Thursday 20 September 2007 10.00 EDT

That the Liberal Democrats are a party whose heart beats on the centre-left has been clear from this week's party conference debates.

The party is becoming as evangelical about climate change as it has long been about constitutional reform. Vince Cable's central theme was the need to redistribute the tax burden to address inequality (though his leader today champions a populist tuition fees policy which fails the redistribution test). Nick Clegg's thought-through proposals on earned citizenship have put the difficult, but probably unavoidable, issue of regularisation of illegal immigrants into the political mainstream. The overall tone has been notably different from the Orange Book mania of three years ago.

The party has been impressive on policy but its desire to be more than a pressure group or thinktank remains unproven. Its weaknesses are less a question of leadership (though anybody else wanting to challenge Nick Clegg or Chris Huhne next time around had better get their skates on) than of communicating a core message and deciding on a political strategy. What does the party stand for? How will it seek to achieve it? Neither question has been clearly answered as Ming Campbell prepares to close the conference today.

The Lib Dems did not fully seize their opportunity at the next election, when they faced an unpopular government and unelectable opposition. Now, feeling the squeeze of a more competitive political landscape, the party wants to assert its identity and relevance. But must this mean a retreat to the Lib Dem comfort zone, sacrificing the party's commitment to pluralism and new politics?

The party has spent much of this year running away from power. Gordon Brown's offer of a Cabinet post to ex-leader Paddy Ashdown, minus any formal party arrangement, proved too mould-breaking for the third party. What is harder to explain is why the Lib Dems rejected every potential coalition option in both Scotland and Wales, following multi-party elections, under proportional representation. When even Ian Paisley and Martin McGuinness seek to make devolution work in Northern Ireland, these serial Lib Dem refusals offer a poor advertisement for the grown-up politics of compromise and cooperation.

Whatever the specific reasons in each case, the Lib Dem leader even seems to have elevated standing aside into a new Ming doctrine, declaring 'we will not trade principled opposition for ministerial briefcases'. What then do he and his party hope to achieve? If the Lib Dems believe that principle and power are alternatives, how is the party ever going to achieve the shift in British political culture that is at the core of its mission? "Ourselves alone in the radical centre" risks preserving the party's fragile unity over strategic questions at the cost of impotence.

Ming Campbell's formula of avoiding talking about hypothetical future cooperation with other parties is unlikely to survive the scrutiny of an election campaign. He will need to find a way to be clearer on strategy and red lines for the party to achieve his objective of preventing this crowding out all discussion of Lib Dem policy.

Any party relying on a hung parliament for influence can expect to be regularly disappointed. Sixteen of the last 17 general elections have led to single-party majorities. Even if hung parliaments become more common, parliamentary arithmetic and political realities will seldom deliver the third party the "hinge" power to negotiate with two potential partners at Westminster. That will not happen next time, not least because of the quirks of our electoral system.

The next election has become Gordon Brown's to lose. But since any Labour lead at all would probably deliver the party an overall majority, a hung parliament will arise only if the Labour government has been clearly defeated at the polls and David Cameron's Conservatives lead the popular vote. It is difficult to see a Labour-Lib Dem deal after that. By contrast, the Conservatives need a nine-point lead to escape hung parliament territory. The most plausible Tory route to power would depend on their both doing much more to break out of their core vote and cosying up to the Lib Dems at the same time- yet David Cameron's "rebalancing" lurch rightwards has seen him retreat on both fronts.

Those Lib Dems who want to put "equidistance" between the major parties back on the agenda should be careful what they wish for. The hung parliament scenario could be a hazardous one, splitting the parliamentary party from their local council and activist base. Lib Dems and liberal Conservatives might find common ground over localism and civil liberties, but there is a deep gulf between the two parties on defining issues of tax, immigration, family policy, inequality, the constitution and Europe.

If Gordon Brown is unlikely to save his job through a post-election deal with the Lib Dems, should he simply ignore the third party? There is little life in the Lab-Lib idea. Most in both parties have eagerly resumed partisan hostilities. But the Fabian Review conference special, published today, argues that Gordon Brown's goal of embedding a "progressive consensus" means that he should continue to reach out across party boundaries - out of choice, rather than post-election necessity.

On many of the major issues of our time, a distinctive progressive approach to the national interest should cross party boundaries, including climate change; democratic reform; ending child poverty and narrowing the class divide in education; engagement with British Muslim communities; and winning the public argument for Britain's place in Europe.

Whether a progressive consensus is possible will be debated at Labour conference fringe next week, where Vince Cable and David Laws will join Michael Wills, James Purnell and Angela Eagle at a Fabian/CentreForum event. Lib Dem MP Mark Oaten, writing in the Fabian Review, argues that renewing cooperation with Labour would have a "strong emotional and practical appeal" for many Lib Dems, but that the jury is out and that "equidistance" and talking to Cameron's Conservatives should not be ruled out. Arguing that Tony Blair's record on civil liberties and Iraq made cooperation unthinkable in the last parliament, Oaten suggests that Brown could reconnect with Lib Dems by engaging in dialogue on civil liberties and looking again at electoral reform.

Gordon Brown has said only that he is "not closed" to electoral reform. He should use his Governance of Britain consultation to put electoral reform back on the agenda - and to broker a historic compromise: electoral reform without proportional representation. He should indicate he would support changing to the Alternative Vote in a national referendum, as part of a democracy package in Labour's next manifesto, including a second chamber which is 80% elected by PR, and electoral reform for local government. Supporters of PR should find that a compromise worth making to build the historically elusive consensus for reform.

It is an agenda which should be pursued with or without Lib Dem involvement. Those with a sense of history should find the case for ending a century of stalemate over both the voting system and Lords reform compelling - especially as this next great Parliamentary Reform Act would coincide with the centenary of Lloyd George's battles with the Lords.

It is in Brown's interest to go the extra mile in proving genuinely pluralist intent, engaging substantively with progressive opinion of all parties and none. Just as Paddy Ashdown famously asked Tony Blair, "Are you a control freak or a pluralist?", Brown would be offering Ming and his would-be successors a potentially historic test: would the Lib Dems choose progressive pluralism or purist impotence?

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